Take a sneak peek into other investors' ISAs: chart-topping funds revealed

Popularity
isn't necessarily the best indicator of performance, but it can be
revealing about other investors' thinking and strategy.

So for those who fancy a sneak peek into what everyone else is investing in, here's
our round-up of fund league tables released by some of the top Isa
platforms, covering the previous tax year and the
last-minute rush period.

A peek inside: Fund supermarkets have revealed what investors have been putting in their Isas

Big name fund winners

The Share Centre, which attracts a broad range of personal investors who are savvy but not usually hardcore DIY Isa enthusiasts, saw Aberdeen Emerging Markets top its league last year.

'This tax year it seems an appetite for increased risk with the potential for greater returns remains at the forefront of investors’ decisions,' says investment research manager Sheridan Admans.

'A collection of investors are clearly seeking income, potentially to help supplement their lifestyles, whilst others are demonstrating the belief that global and emerging market opportunities are where the opportunities lie.'

Investors hunting bargain trackers

Alliance Trust Savings has a charging structure that tends to attract sophisticated investors with larger portfolios who want to keep costs to an absolute minimum.

The provider refunds the commission it receives and all initial charges, instead applying an annual charge and charging whenever clients buy or sell.

Its table shows the top funds bought on its i.nvest platform during the busy tax year end-period between January 1 and April 5. (It also includes funds bought outside Isas.)

ALLIANCE TRUST I.INVEST

1. Vanguard FTSE UK Equity Index

2. L&G UK Index Trust

3. Vanguard FTSE Developed World ex-UK Equity Index

4. Vanguard US Equity Index

5. M&G Strategic Corporate Bond

Four of the top five funds were trackers, or passive funds, which track a broad market index or segment. As they don't involve active management, annual management charges can be kept very low.

The table is also dominated by
Vanguard, a relatively new tracker provider which is not offered on many
platforms because its funds don't pay them a rebate.

Alliance Trust's i.nvest platform was the first in the UK to offer Vanguard funds and it says customers show 'great appetite' for them.

Garry Mcluckie, marketing director at Alliance Trust, says: 'Clients and [financial] advisers obviously see the benefit of tracker funds as part of a balanced portfolio. With low annual management charges we expect the appetite for these funds to continue to grow strongly.'

Income seekers vs growth hunters

Hargreaves Lansdown runs one of the biggest fund platforms in the country so just the sheer volumes involved make its league table an interesting read.

Its table covers the top Isa buys between April 1 2011 and March 31 2012.

Investment manager Ben Yearsley says there is an interesting split in the table between income-seeker investors - who dominate with six entries - and growth seekers who have gone for Russia, emerging market and energy funds.

He also points to the continued popularity of successful and famously bearish fund manager Neil Woodford with four Invesco entries.

But he adds: 'It's people liking Woodford. I don't think it's a sign of people being bearish or bullish.'

Cautious investors turn to quality

Giant investment house Fidelity runs FundsNetwork - one of the platforms used by low-cost Isa provider Cavendish Online.

Cavendish will set up an Isa account on FundsNetwork for free (it has scrapped a previous £25 charge). Fund managers typically pay an annual fee known as trail commission of 0.75 per cent to whoever sold the fund, which is effectively taken from your investment. Of this, 0.25 per cent goes to the platform on which the funds are sited and 0.50 per cent a year, the advice fee, goes to the introducer.

FundsNetwork's most popular fund for Isas bought during February was one of Fidelity's own products.

Cavendish gives all of the advice fee back to you, which is normally a rebate of 0.5 per cent on most funds.

Tom Stevenson, investment director at
Fidelity Worldwide Investment, comments: 'Investors remain cautious
which is understandable given last year's market volatility and the
prospect of further challenges ahead in 2012.

However,
investors are finding opportunities in a wide range of sectors
including equity income where they can benefit from the proven returns
to be gained from the reinvestment of high and sustainable dividends.
Over time this can help smooth short term volatility.

'It
is good to see global funds and emerging markets in the top ten too,
suggesting that investors are regaining some of their appetite for risk
after a long period in which they have sought the safety of cash and
bonds.'

Investors seeking safety of bonds

Cofunds is an industry platform used by financial advisers investing on behalf of clients and financial institutions.

'Not surprisingly, given the fact that people have chosen to invest their money via an execution-only platform rather than receive advice from a financial adviser, the funds selected have displayed long-term consistently strong performance, so many people will have seen these funds in best-buy tables,' says Matthew Cox of Skipton Financial Services.

'Eight of the ten funds are towards the higher end of the risk scale so it looks like, given the double whammy of the current low savings rate environment and inflation still riding well above the Government’s 2 per cent target, investors are happy to take a bit more risk in an attempt to increase the potential return.

'They are all large funds with millions invested in them so execution-only investors are putting their money behind well established popular funds which themselves invest in large globally recognisable companies, rather than taking a punt on smaller less fashionable companies.'